For the past 13 years, Roman Rankin has owned and operated a small pizza shop in Melbourne's south east.

At one point, he employed 23 staff.

Soon, Maro's Pizza will be down to just five - a situation Mr Rankin blames on a struggling retail sector and a complicated mix of industrial laws and penalty rates.

"My lease is up in July of next year and I will fight tooth and nail, scratch, claw, whatever it takes to survive my lease," Mr Rankin told ABC News Online.

"But if something doesn't change, if (the Government) doesn't get real about what is going on in the small business community and in retail in general... you're going to have a lot more than me closing their doors in 12 months' time."

He says the award modernisation process that has taken place since Labor took office in 2007 has pushed up the cost of doing business and it is time the Government accepted the realities of a modern economy.

"Unless the Government realises that we are a seven-day economy that needs one wage, it's never going to solve the problem," Mr Rankin said.

"Penalty rates are something that were right 20 years ago, but they're not right today."

Mr Rankin is not alone in that view.

The body representing small business owners says it is time to do away with penalty rates and instead introduce a one-size-fits-all award rate for all small businesses, regardless of when people work.

The head of the Council of Small Business Australia (COSBOA), Peter Strong, says it has become too expensive for many smaller stores to open on Sundays or public holidays, and that has the perverse outcome of costing people jobs.

He concedes moving to a universal small business award rate would be a "radical" change, but it is needed.

"There should be one pay rate regardless (of when people work), and then from there it'll be between the employer and employee on whether they pay them more than that pay rate," Mr Strong said.

"There will definitely be a backlash from the unions because this is very radical and it's very different... but unions debate from the big business point of view, the small business area is non-unionised.

"(I'm) ready, willing and able to debate anybody around the real issues of the workplace which is about people - not ideology."

'Will not work'

Fair Work Australia is currently carrying out a review of the modern awards, as required under the legislation.

Mr Strong says he has had positive discussions with FWA president Ian Ross about his concerns and is confident the industrial regulator understands the problems small businesses face.

The Government too says it is sympathetic to the pressures facing small business owners, including the extra cost imposed on them through penalty rates.

"(There's) no point having a reward for working certain hours if the reward is of such a threshold that it doesn't in fact allow for businesses to open and therefore doesn't allow employees to be afforded that benefit," Small Business Minister Brendan O'Connor told ABC News Online.

"I think we need to seriously look at that.

"(But) to suggest that you get no benefit by working on those days (that) the majority of Australians would not want to work, I think is unreasonable."

Mr O'Connor says there needs to be a careful balance between appropriate compensation for people working unsociable hours and the costs imposed on businesses.

And he is also lukewarm on the idea of having a single award to cover all small businesses, declaring the idea "will not work".

"It sounds simple on the face of it, but it is not a simple thing to do to try to create one industrial vehicle to effectively apply to 4.5 million people," he said.

"(But) I will continue to work with COSBOA and work out how we can reduce complexity or any confusion that their constituency has."

Fair Work Australia's full-scale review of employment awards is due to be finished by mid-next year.